First and Foremost.
Congratulations to VRC, what an amazing job every single employee has done, all the hard work is clearly reflected in such a detailed and very conservative PFS, a PFS unlike any other I’ve seen; the depth of the information is unmatched, not even other BFS/DFS from our peers go to the depth VRC just did. Well done for such transparency in the breakdown of the facts, and thank you for providing the PFS in a timely manner.
For anyone curious about comparative
facts to our peer:
As you can deduce, the mines are extremely similar in nature.
This is great! As it shows the caliber of VRC at PFS stage is already up to par to MNS in its current position who have had a big head start to us.
So why a significant difference between NPV values 890M vs 1.04B and 1.69B (BFS)?
It simply comes down to the assumptions made on the pricing of the flake sizes:
I believe in MNS’s BFS, they grouped large, medium, small and fine flakes into one assumed price: $2125.
This means that for every single tonne of graphite that falls under any of those flake sizes can be sold at a price of $2125. This means MNS is fully capable of selling for example 1 tonne of
fine graphite flake size for $2125 while VRC can only achieve $403….
If VRC also used the same method and grouped large, medium, small and fine flakes into one category with one assumed price. It would be something like this:
{$2070 (large) + $1389 (medium) + $1077 (small) + $403 (fine)}/4 = $1234.75 per tonne.
This fundamental difference in price assumptions is the
primary reason for the vast majority of the difference in NPV and IRR currently. My hunch would also be that the banks also have deduced this fundamental non-conservative flaw, hence why MNS has not yet been able to successfully fund their project via debt.
I’ll admit, yes, MNS so far even if they used VRC’s much more realistic pricing assumptions
(based on BMI, IMR, Macquarie Investments and end users) would still have a better basket price as they currently have better flake distributions, but the gap would be much smaller; instead of a 28% difference, it could be 15-18% in difference.
I must say I was expecting an overall better flake distribution ratios, but with an upgraded 461MT @ 4.9 TGC, we still physically have a very decent tonnage of Super jumbo and jumbo, and with further drilling incoming next year, I’m confident we will see further improvement in both flake distribution and resource size “DFS will target additional high quality large flake size graphite from Namangale South”.
I am very happy with this PFS, very happy with my holding and very confident that Volt Resources will have a stellar 2017.
Goodluck to all holders.
Cashbacked (p.s.: i'd appreciate if you could like this post again
)
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